Comment on the following: For the purpose of issue of bonus shares, the reserves created by revaluation of fixed assets shall not be capitalised.
CS Executive · Capital Markets & Securities Laws · PYQS · December 2016
Comment on the following: For the purpose of issue of bonus shares, the reserves created by revaluation of fixed assets shall not be capitalised.
Answer & Explanation:
The statement is true . Bonus shares shall not made out of revaluation of fixed assets. Capitalisation of profits refers to the process of converting profits or reserves into paid up share capital. The company shall issue bonus shares out of Free Reserves, Securities Premium Account and Capital Redemption Reserve Account.
Topics: Corporate Actions
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